SME unlisted company with EMI share options granted in the year. Agreed valuation of options by HMRC (AMV and UMV) both below exercise price, and all options vest on exit, not expected for 4-5 years. For FRS 20 purposes, can it be argued that the fact the AMV agreed with HMRC is below the exercise price means no charge? Or do we still need to go thru pain of Black-Scholes or similar?
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You'll still need to use a recognised valuation model such as Black-Scholes to determine the option value even if market value is equal to or less than exercise price. Depending on the difference between exercise price and market value you may find the share volatility which causes a FRS20 charge.
I had a similar scenerio myself quite recently where I'd assumed that HMRC confirmation of market value would mean no FRS20 charge but our auditors thought otherwise. Ended up being a fairly meaningless number when you start using volatility of PLC's several hundred times your size in your model.
FRSSE
I assume it's unable to adopt, or else doesn't want to adopt, the FRSSE? That would only require some limited disclosure rather than valuation models etc.